IATA seeks meeting with Venezuela president over money owed to airlines

[hack89]

Source: Reuters

(Reuters) - A leading air transport industry body has called for a top-level meeting with the Venezuelan president to discuss ways to restore over $4 billion of airlines' money that is trapped in the country due to its currency controls.

President Nicolas Maduro's government requires airlines to sell tickets in the bolivar currency but has been slow to allow them to repatriate the earnings.

The International Air Transport Association (IATA), which represents around 240 global airlines, said on Monday that while Venezuela had permitted repatriation of $424 million shared among some airlines, $4.1 billion of airline ticket sales remained trapped in the country.

Unable to repatriate ticket sales, many airlines, such as Delta, American Airlines and Lufthansa have slashed the number of flights they offer, while others such as Alitalia and Air Canada have halted flights altogether.

Read more: http://www.reuters.com/article/2014/07/28/venezuela-airlines-idUSL6N0Q33IL20140728

---

This is what happens when a country can't pay its bills.

[COLGATE4]

1. No, this is what happens when a country

WON'T pay its bills.

[candelista]

2. This isn't about "paying bills."

It's about keeping up the price of the currency.

[Perseus]

3. This IS about not paying the bills

The Venezuelan Government is not paying because when purchases are made they are holding the money, it is not the people who owe the airlines, it is the corrupt Venezuelan government.

Maduro, Cabello, or the Chavez family can most probably write a check from their own coffers, which is filled with stolen money, and pay the airlines.

[candelista]

4. No.

The airlines can have that money...so long as they spend it in the country. What they can't do is convert it into dollars and take it home and invest it somewhere else.

[christx30]

5. They earned that money

providing services to their customers. It's their money. They can do whatever they want with it. If you worked at a grocery store, you wouldn't want your entire paycheck to be given to you in the form of store credit.

[candelista]

7. These are corporate profits, extracted from Venezuelan customers.

So the Venezuelan government wants to keep those profits in the country. Comparing this to a salary from a grocery store is like comparing apples and oranges.

[christx30]

12. They weren't "extracted"

from the Venezuelan people. No one forced those people to take flights. Everything was voluntary.
Again, this is money that was earned by the airlines for doing their jobs. If they want to convert it to dollars and invest it overseas, or bury it in peat moss for the next 6 months, I don't care. But it's THEIR money. If Venezuela has a contract to do something, they need to do it.
If a government treated my business like this, I would stop doing business in that country. I would take all of my stuff out of there that's not nailed down, then announce once it couldn't get expropriated.

[candelista]

21. That's libertarianism.

Just saying.

[Igel]

27. Wouldn't this be billions of dollars in un-repatriated earnings?

I mean, we get bent out of shape when a company keeps its profits in another country instead of bringing them back to the US and paying income tax on them. They're unpatriotic, tax-avoiding vampires.

All of those profits kept overseas ... I guess they're "profits extracted" from those countries' citizens and the multinational corporations are doing a good deed by keeping them in those countries.

So rather than being unpatriotic and tax-avoiding, they're being good international citizens.

Maybe we can consider US-earned profits that are shipped overseas "international aid."

It's one or the other.

In the case of the airlines, though, the planes they fly and the back-of-house support that maintains the corporations aren't in Venezuela. They have to pay for those things using income wherever it's earned. It's "profits" in Venezuela because not all the expenses incurred to make those profits are incurred in Venezuela.

And saying that what you make is yours to use isn't libertarianism. Any more than it's up to others to tell you how to use your earned income. I'm using excess income to pay down my mortgage. I'd really object if the government said, "No, you need to spend it on widgets because the widget industry needs a boost from increased demand."

[fasttense]

52. You can NOT do whatever you want with your money and you never could.

"It's their money. They can do whatever they want with it."

Money has always had restrictions on its use.

In the feudal economic systems, you could not use your money to buy certain colors, fabric or even foods because they were restricted to Royalty only. Under a king, certain businesses (usually controlled by royalty) had monopolies on certain products such as tea, dyes and herbs. So you could NOT buy these items from anyone else or you would be punished. Under feudalism you could NOT buy transportation out of an area without the king's or lord's approval.

In slavery, you could NOT use your money to buy yourself out of slavery. In some forms of slavery you could not use your money for anything because you were NOT allowed to own anything. But if you were not a slave you could buy a human being. Today, buying people is considered illegal and immoral.

Capitalism is much the same. We restrict the quantities purchased on many things to ensure that only the rich can buy them. Government bonds, facilities and outsourcing services are just a few examples of such restrictions. I can NOT sell my tomatoes to the USDA (who then forces schools and government institutions to use them) because they want thousands of pounds of it all at one time which as a small farmer I can NOT produce. A school can NOT buy tomatoes from me because the government restricts their use of funds. Yet the big factory farms can. We also do not allow money laundering or the purchase of certain drugs, prostitutes and weapons of mass destruction.

The US has ensured that to buy oil you must have dollars. Since the agreements of 1971 and 1973, OPEC oil is exclusively quoted in US dollars. This creates a permanent demand for dollars on the international exchange markets. As of 2005, OPEC continues to trade in US Dollars, but some OPEC members (such as Iran and Venezuela) have been pushing for a switch to the euro. So if you had yens you could not buy oil with them.

Today you and I are limited as individuals from giving more than $2,600 to a candidate http://www.fec.gov/pages/brochures/contriblimits.shtml. Corporations can give as much as they want.

So to blame other countries for placing restrictions on the use of their currency is to pretend you live in a libertarian paradise.

[geek tragedy]

6. What about the costs of operating

the flights to VN? VN is saying their tickets sales in VN can't be used to cover the costs of airplane parts, maintenance, salaries, insurance, etc. the localized costs of operating flights are very limited.

If the airlines lose money on the flights to/from VN, they will stop flying.

[candelista]

8. The money has to be spent in Venezuela.

They have to get their parts, maintenance, etc. through Venezuelan companies. That's all.

[geek tragedy]

9. "That's all." How many 777's does VN manufacture

on an annual basis?

Can one run into Caracas and pick up an Airbus 320?

[candelista]

11. Airlines have to buy 777's through a Venezuelan intermediary.

That way a Venezuelan company--or perhaps the Venezuelan government--will make money. The point is for the profits of the airlines to be spent in Venezuela.

[geek tragedy]

14. In other words, it's a simple shakedown.

Please do not complain when airlines stop flying there.

[candelista]

15. Defending corporate profits?

What kind of "Democrat" are you?

[geek tragedy]

16. If VN wants to start its own airline by all means

it should do so.

But, it is a fantasy that foreign companies should be expected to lose money for the privilege of providing air service to Venezuelans.

If the government makes it impossible for them to even break even by flying to VN, then they will simply stop flying to VN.

If VN will demand that the airlines' money stay in VN, well then so will Venezuelans.

[candelista]

19. There are plenty of other airlines in the world.

Venezuelans will not be stranded.

[geek tragedy]

23. Not if they lose money by flying there. nt

[christx30]

17. Corporate profits

pay their employees. If the cable company I worked for stopped making profits, I would lose my job.
And having to go through an intermediary to get parts would be a terrible way of doing business. Too much chance for corruption. And it would make things more expensive, because every middle man wants a slice of that pie.

[candelista]

18. You don't understand what profits are.

Profits are what is left over after everyone is paid, including management and workers. Profits are the part of company revenue that goes to stockholders.

[geek tragedy]

20. If VN wants to prevent airlines from making any

money in VN while ensuring that VN's people get air service abroad, then it has one option: buy its own airplanes, start its own airline, and pay 100% of the costs of operating the airline and receive 100% of its revenue.

That would be the actual socialist policy.

[candelista]

22. They'll get to that.

[EX500rider]

33. That's net profit...gross profit is before expenses.

[candelista]

41. That's just a verbal disagreement.

What you (mistakenly) call "gross profit" is actually total revenue. That's the terminology used in the stockmarkets.

[EX500rider]

44. Also wrong.

Gross profit is total sales minus purchases (inventory).
Net profit is gross profit minus expenses.

[candelista]

46. Look.

When I speak of profit what I mean is the money over and above company expenses, including insurance, wages, salaries, money set aside for expansion, etc. I am talking about the money that goes to stockholders. I thought I made that clear from the outset. It is obvious that non profit companies (in this sense) can exist, because they do exist. An none of your mistaken terminological quibbling will change that fact.

[Throd]

29. You expect companies not to make a profit?

What kind of "economist" are you?

[candelista]

30. All companies should be non-profit.

Why not?

[EX500rider]

35. Why not?

How else do you have money to buy news planes and hire extra people when you need them?
By making a profit.

[candelista]

38. That doesn't come from profit.

Profit is what goes to the stockholders. A non profit company can still expand, buy new stuff, hire new employees. I'm surprised you don't know this.

[EX500rider]

45. Also wrong.

A. Not all companies are owned by stockholders. There are private companies and private corporations.

B. If I want to save enough millions to buy 10 new jets 5 years from now I need a profit every year until then.

[candelista]

48. In a family owned company, profit is the money that goes to the family...

...after all business expenses are paid. Is that notion so difficult? The points you are making are irrelevant to the issue of whether companies, including airlines, can run on a non-profit basis. Of course they can! Surely you know that.

[EX500rider]

49. Name one "non-profit" airline that doesn't need government subsidies to survive.

[7962]

13. Is that VZ law, or are you just pulling it out of thin air?

Either way, the end result will be the further decline of the most oil rich country in the world. Proving the folly of the "revolution' from the start years ago.
Can you imagine if that was the law in every country? A lot of countries would go right back to 3rd world status

[candelista]

24. Check it out for yourself.

You wouldn't believe it from me. And BTW, I doubt your "prophecy."

[7962]

37. So far I've been right. Likely to continue too.

Chavez was a joke, and Maduro isnt as smart as HE was. That beautiful country will wake up before its too late. Thats my next "prophecy"

[candelista]

39. Congrats.

[hack89]

28. But that won't work

because those parts have to be imported, which means they are purchased in dollars on the global market. Unfortunately those companies can't get the dollars they need due to VZ currency policies.

[candelista]

31. No.

Venezuela can exchange bolivars for euros, yen, etc. to buy foreign goods. Where did you get the idea that they have to go through the US dollar?

[EX500rider]

34. Parts for Boeings come from the US where they prefer US currency.

[candelista]

40. Who says they have to buy Boeings?

Airbus makes some fine planes. Russia, too. And I'll bet some company somewhere can make parts for Boeings if Venezuela decides to use them.

You are straining at a gnat.

[EX500rider]

42. Who says? Airlines can buy what ever they like i believe,

..and no, "some company somewhere" can not make bogus illegal parts for Boeings, that's called counterfeiting.

And no, Russia does not make "some fine planes" when it comes to passenger planes.

[Throd]

50. You're straining at reality. Who the hell would want to fly on a plane with fake parts?

I don't even trust knock-off parts for my car.

[hack89]

36. Dollars are the global currency

Especially for US parts for US planes.

[candelista]

43. No.

Dollars are the international reserve currency. Bolivars can be exchanged for Swiss Francs, euros, etc. And Venezuela does not have to buy US parts for US planes. As any aircraft mechanic will tell you, there are plenty of fine knockoffs available from other countries.

Your points of disagreement keep getting smaller and smaller.

[EX500rider]

47. Both illegal and very wrong to use counterfeit parts on planes.

As any aircraft mechanic will tell you, there are plenty of fine knockoffs available from other countries.

No they will tell you no such thing and you will void any and all warranties AND make the plane very dangerous to fly on.

[christx30]

51. So the solution is to

get the bolivars exchanged for francs, pounds, ect, and then go elsewhere and convert them to US dollars. Just one more middleman to go through. Slightly less money, but it's better for the company than relying on a Venezuela based company that doesn't have license to manufacture the part.

[7962]

10. Dont forget, Chavez' family STILL live in the fancy presidential home

Last time i heard anyway. And its no dump either.

[COLGATE4]

25. What the hell is that sentence supposed to mean?

[brooklynite]

26. Maybe Venezuela could simply bar its citizens from traveling abroad...

...then the Government could ensure that all of THEIR money was spent with Venezuelan companies, and the airlines could shut down their Venezuela service. Win-Win!

BTW - Travel bans were very popular in the authoritarian State -I- lived in. Should fit right in.

[candelista]

32. I doubt that Venezuela would do that.

But they might place restrictions on moving money out of the country.

And by the way, if you live in the US, you still live in an authoritarian state, dictated by the 1%.